1. Operative Clause

The Insurer shall indemnify the Insured against the cost of repairing, replacing and/or strengthening the Premises following and consequent upon an Inherent Defect which is discovered and is notified to the Insurer during the Period of Insurance and not excluded herein causing any of the following events:

a. Physical damage to the Premises; or

b. The threat of imminent collapse to the Premises, which requires immediate remedial measures for the prevention of an actual collapse within the Period of Insurance.

2. Additional Benefits

In addition to and consequent upon the above indemnity, and in connection with events (a) or (b) described above in (1) of this Article, the Insurer will indemnify:

a. The cost of demolishing the Premises and/or the removal of debris from the Premises incurred by the Insured up to the Limit of Indemnity prescribed in the Schedule.

b. The legal, professional or consultants’ fees incurred by the Insured up to the Limit of Indemnity prescribed in the Schedule. The Insurer will not be liable to the Insured for fees incurred for the purpose of preparing a claim under this Policy. 

c. The additional costs of repair or replacing and/or strengthening which arise out of alterations in design, use or application of improved materials, improved or altered methods of working or construction incurred solely in compliance with or consequent upon any building or other regulations under or in pursuance of any related law and regulations. This does not include the costs of complying with such requirements where such requirements have come to the attention of the Insured before the events (a) or (b) described in clause (1) of this Article become manifest, or such costs which relate to undamaged or unaffected parts of the Premises.

3. Period of Insurance

a. The period of Ten years (calculated using the Gregorian Calendar) commencing on the Date of Inception and expiring at midnight on the Date of Expiry as shown in the Schedule, provided that:

1. The Occupancy Certificate has been issued.

2. The premiums due have been paid to Insurer in accordance with Premium Payments clause provided in Article (5). 

3. Insurer has received the Certificate of Approval.

4. Insurer has issued an endorsement indicating that the Policy is in force.

b. The Period of Waterproofing coverage is the period commencing 12 months after the Date of Inception and expiring at midnight on the Date of Expiry as shown in the Schedule, provided that:

1. The Insurer has received a supplementary Certificate of Approval from the Technical Inspection Service for the Waterproofing works.

2. The additional premiums have been paid to the Insurer if the supplementary Certificate of Approval is not unqualified.

3. Insurer has issued an endorsement indicating that the Waterproofing coverage is in force.

c. In those cases where the Building Contract provides for more than one Occupancy Certificate:

1. Inception shall take place in respect of Premises which consist of a single building following issuance of the Occupancy Certificate for the Premises as a whole unless otherwise agreed in writing by the Insurer.

2. Inception shall take place in respect of Premises which consist of more than one building following the issuance of the Occupancy Certificate for each building unless otherwise agreed in writing by the Insurer.

4. Under Insurance

If an Inherent Defect has been discovered, and the full rebuilding costs of the Premises is greater than the Total Sum Insured or adjusted in accordance with Clauses (7) and/or (11) of General Conditions, the insured will be entitled to compensation according to the Total Sum Insured specified in the Policy Schedule to the full rebuilding costs.

5. Limits of Indemnity

The liability of the Insurer shall not exceed the Limit of Indemnity shown in the Schedule for the Period of Insurance unless cover has been increased by endorsement and the appropriate additional premium paid to the Insurer but excluding in respect of each and every claim the amount specified in the Schedule as the Deductible. If the Insured comprises more than one party, the total liability of the Insurer shall not exceed the amount for which the Insurer would have been liable as if there had been a claim by only one Insured.

6. Application of Deductible

The amount of the Deductible specified in the Schedule shall apply to each Inherent Defect, after the application of all other Terms and Conditions of the Policy, and not to the aggregate of claims arising during the Period of Insurance. Multiple claims arising from the same Inherent Defect shall be treated as one claim for purposes of application of the Deductible.

25. The company must verify the capacity of its website to be expanded and to assimilate any additions that might arise in the future this includes—but is not limited to—capacity of the website to assimilate any increase in the number of users, and assimilate the online insurance activities resulting from sales of insurance policies, receiving claims and handling complaints.

26. The company's website must be accessible twenty-four hours a day during the whole year and the website's unit must monitor the website's availability.

    In case the website is undergoing maintenance procedures, the website's unit must ensure that it does not exceed twenty-four hours as a maximum. In case the maintenance procedures are not finalized within the set period (i.e., twenty-four hours), the company must notify Saudi Central Bank in writing about the reasons that caused the damage to the website and specify the timeframe expected to reactivate the website.

27. The company must—after applying the procedures included in this regulation— when outsourcing online insurance activities to another party or outsourcing the development, hosting, management, or maintenance of its website or any other work related to the website, include a specific text in the outsourcing contract that obliges the other party to abide by the rules set in this regulation, the Outsourcing Regulation to Insurance and/or Reinsurance and Insurance service providers, the Market Code of Conduct Regulation and other regulations related to the content specified in Article (3) of this regulation.
28. A company, wishing to sell its insurance products through a third-party website licensed to do so, must obtain Saudi Central Bank's prior written approval. The company must also verify that the third party's website meets the following conditions:
    1. If the same third party's website is used to sell insurance products related to other companies, each insurance product offered must be clearly linked to the company offering it.
    2. Include all information and statements that the company must disclose, this includes—but is not limited to—the name of the company, its address, its licensing status, the nature of its insurance activities, and the contact details of the company.
    3. The third party must clarify, on its website, the role it undertakes and its obligations with respect to the users such as the insured. It must also specify whether it is an agent, or a broker licensed by Saudi Central Bank.

46. The Board must choose a Non-Executive Director as Chairman of the Board, and also the Board may select a nonexecutive member as Vice-Chairman (after obtaining "no-objection" from Saudi Central Bank).
47. The Board shall authorize the Chairman to organize its activities and grant him or her the necessary powers to discharge his or her responsibilities.

48. The Company's code of corporate governance shall define the roles and responsibilities of the Chairman.

    In addition to any other regulatory or supervisory requirements and to the duties of Board members, the duties of the Chairman shall include but not be limited to the following:
     

    1. Organizing the Board's activities, including setting the agenda for Board meetings in consultation with the CEO and other Board members, presiding over Board meetings, and overseeing the process of providing the Board with information and reports
    2. Representing the Company before judicial bodies and supervising the relationships between the Board and internal and external parties
    3. Supporting the Board's efforts in promoting higher standards of corporate governance and ensuring compliance with applicable laws and regulations at all times
49. The Chairman's responsibilities shall not overlap with those of the CEO. The responsibilities of the Chairman of the Board shall be restricted to his or her supervisory role and shall not extend to the executive responsibilities reserved for the CEO.
50. It is prohibited to conjoin the position of the Chairman of the Board with any other executive position in the company, such as the Chief Executive Officer (CEO) or the managing director or the general manager.
51. The Chairman shall ensure that the Board conducts its activities responsibly, without unduly interfering with the Company's operational activities.
52. The Board can, by a majority vote of all Board members, dismiss its elected Chairman at any time.

53. The Board shall be of an efficient size. The number of Board members must not be more than eleven (11) or less than five (5) members on a permanent basis.
54. The Board composition shall reflect sufficient representation of Nonexecutive Independent Members, and in all cases, Non-executive Independent Members shall not be less than two (2), or a third of the Board, whichever is greater.
55. Members of the Board shall collectively have the appropriate diversity with respect to qualifications, knowledge, experience, and skills in the various areas of the Company's business and operations. In addition, each individual Board member must possess the appropriate level of qualifications, knowledge, experience, skills, and the integrity to effectively perform his or her role and discharge his or her responsibilities.
56. A Board member shall not be a member of a board of another local insurance and/or reinsurance company, or any other board committees, or occupying a leadership position in such companies.
57. The Company shall have formal and transparent policies, standards and procedures for Board nomination, which are approved by the general assembly and communicated to Saudi Central Bank.
     

58. The Board nomination process shall take into account the following:

    t) Allowing sufficient time for receiving nomination proposals for Board memberships

    u) Reviewing nomination proposals for Board memberships by the nomination and remuneration committee and documenting any findings and recommendations

    v) Obtaining Saudi Central Bank's written non-objection prior to the appointment of any Board member

    w) Providing shareholders with adequate information on the candidates' qualifications and relationships with the Company prior to voting

    x) Applying the Cumulative Voting Method when voting in the general assembly for appointing Board members

59. The Company must notify Saudi Central Bank when a nomination proposal for Board membership has been rejected and must specify the reasons for the rejection.

60. The number of Board candidates presented to the general assembly for voting shall exceed the number of available seats in order - to provide the general assembly the opportunity to select among several candidates.

    The Board can engage the services of an independent specialized external party to identify additional candidates for Board membership when the number of Board candidates is insufficient.
     

61. If the position of a Board member becomes vacant, the Board can, after obtaining Saudi Central Bank's prior written non-objection, temporarily appoint a new member to the vacant position for the remainder of his or her predecessor's term, provided that such appointment is presented for approval at the next general assembly.
62. Members of the Board shall undergo an induction program once they join the Board. Each member shall be provided with a letter of appointment outlining his or her roles and responsibilities, and comprehensive information on the Company's business and strategic plans and on applicable laws and regulations.
63. Members of the Board shall endeavor to educate themselves on, and be regularly updated of, regulatory developments and to undergo periodic training, as needed, on relevant areas and topics, including but not limited to corporate governance, risk management, finance, solvency, insurance, internal control, law, regulatory compliance, and any other important topics.

64. The code of corporate governance of the Company shall define the roles and responsibilities of Board members.

    In addition to any other regulatory or supervisory requirements, the duties of the Board shall include but not be limited to the following:

    1. Providing strategic guidance to the Company, including setting objectives and formulating strategic plans
    2. Supervising the implementation of strategic plans and major transactions
    3. Approving key policies and procedures and regularly reviewing and updating them
    4. Establishing and monitoring the Company's internal control system and ensuring its adequacy and effectiveness
    5. Establishing and monitoring a risk management system, where risks are assessed, managed, and monitored on a continuous basis
    6. Selecting and changing (if needed) executives in key positions, and ensuring that the Company has an appropriate replacement policy for their replacement by an appropriate alternative with the necessary skills and eligibility for the office
    7. Supervising Senior Management and monitoring the Company's performance against the performance objectives set by the Board
    8. Ensuring the integrity of the Company's accounting and financial reporting system and the appropriateness of its disclosure process
    9. Ensuring that the interests of the policyholders are being protected at all times
    10. Promoting higher standards of corporate governance and ensuring compliance with applicable laws and regulations at all times
65. The Board shall establish written policies and procedures to organize its activities in a formal and transparent manner.
66. The Board shall grant the audit committee the appropriate level of authority to investigate any matter within its mandate and shall ensure that the internal audit function is autonomous and is granted full access to all the information it needs to conduct its activities. In addition, the Board should take all necessary measures to ensure the responsiveness of Senior Management to internal auditors' queries and recommendations.
67. The Board is responsible for promoting a culture of good corporate governance and high ethical standards.
68. All individual members of the Board shall have the same proportionate control and influence over the decisions of the Board.
69. Members of the Board shall always be fully informed of the course of business and act in good faith; with due diligence; in compliance with the applicable laws and regulations; and in the best interest of the Company's shareholders, policyholders, and other Stakeholders.
70. Members of the Board shall perform their duties free from any external influence, whether from within or outside the Company. Members of the Board shall not allow their own personal interest, or the interest of the parties they represent, to come before, or in conflict with, that of the Company, its shareholders, and other Stakeholders.
     
71. Members of the Board and its committees are prohibited from disclosing to shareholders or the public any confidential information obtained as they perform their role, other than in the general assembly, and must not use such information for their own benefit and personal gain.
72. The Board's meetings shall be held on a regular basis and as needed. The Board shall hold at least four (4) meetings every year and at least one every quarter.
73. Non-executive members of the Board shall hold closed meetings, without the presence of Management members, at least once every year. Staff of the control functions can be invited to attend these meetings, upon the request of the non-executive members holding the meeting.
74. Minutes of the Board meetings shall be recorded, signed by the Chairman and the Secretary of the Board, and entered into an official register.
75. Minutes of the Board meetings shall indicate the meeting's attendance, topics discussed, major deliberations, voting process, objections and abstentions from voting (with reasons if any), decisions taken, and reservations. All records and documents reviewed during the meeting and/or referred to in the minutes shall be attached to the minutes.
76. Members of the Board shall be granted unrestricted access to any relevant information regarding the Company.
     
77. The Board shall be able to seek external independent advice, when necessary, at the Company's expense.
78. The nomination and remuneration committee shall evaluate the performance of the Board (i.e. overall and individual performance) at least annually, using formal, transparent, and objective criteria.
79. Membership of the Board shall be terminated upon:
    1. Expiration of the appointment term
    2. Resignation of the Board member
    3. Death of the Board member
    4. Becoming physically or mentally impaired in a way that could severely limit his or her ability to properly perform his or her role
    5. Being declared bankrupt or insolvent or making a settlement request with creditors or ceasing to pay debts
    6. Being convicted of an offence involving moral dishonesty or contravention of laws in the Kingdom of Saudi Arabia or any other jurisdiction
    7. Failure to fulfill the Board member's obligations in a way that harms the Company (in which case the termination of the Board member must be approved by the general assembly)
    8. Failing to attend three (3) meetings that were held within one year without a legitimate and acceptable reason
    9. Inability to continue performing their role based on any of the applicable laws and regulations in the Kingdom of Saudi Arabia
80. Subject to the applicable disclosure requirements, Saudi Central Bank must be notified when a member of the Board resigns or when his or her membership is being terminated for any reason other than the end of appointment term within (5) business days from the date on which the member leaves.
81. The Board is accountable to the shareholders, regulatory and supervisory bodies, and other Stakeholders.

82. The Board shall appoint a Secretary of the Board, for its term, to arrange the Board activities and provide support and assistance to Board members. The Secretary can be a member of the Board or of Company's staff.
83. The Secretary of the Board shall have adequate experience and knowledge of the Company's business and activities, possess strong communication skills, and be well-informed of applicable laws and regulations and best practices in corporate governance.

84. The code of corporate governance of the Company shall define the roles and responsibilities of the Secretary of the Board.

    In addition to any other regulatory or supervisory requirements, the Secretary of the Board of Directors shall conduct his/her responsibilities as directed by the Chairman of the Board. His/Her responsibilities include, but are not be limited to, the following: arranging meetings of the Board; in addition to ensuring the availability of appropriate means of communication for the exchange and recording of information between the Board and its committees and between members of senior management and non-executive board members; in addition to maintaining minutes of the Board meetings. The minutes are the permanent official record of the work and decisions taken by the Board and its subcommittees. The Minutes shall be accurate and shall clearly reflect all the items and topics discussed during the meetings of the Board of Directors and shall record all decisions taken and any other matters discussed at the meetings.

85. The Board's minutes shall document any votes made during the meetings, including objections or abstention from voting. Any documents referred to during the meetings shall be attached and referred to in the minutes. A comprehensive statement shall be prepared containing the names of the present and absent members, and a list of committees approved and any case of abstention (if any) by any member and the reasons thereof.
86. The secretary shall give advance notices, send meeting agendas with any relevant materials to Board members and ensure their delivery within a period of (10) working days prior to the meeting.
     
87. Minutes of the meetings shall be distributed to the parties concerned within a period not exceeding fifteen (15) days. The person or entity responsible for implementing the resolutions taken shall be determined. The Board should, at the beginning of each year, set a specific timetable for receiving reports from the committees concerned and internal and external auditors, and shall ensure that the mechanism for the collection, preparation and submission of reports and data is in place and in line with the internal adopted policy. It shall also ensure the preparation of important information and its presentation to the Board on a timely basis.
88. The compensation of the secretary for performing this role shall be determined by the Board.

39. The company must, when selling any insurance policy on its website, abide by Articles (50) and (51) of the Insurance Market Code of Conduct Regulation specific to post-sale.
40. The company must put in place clear procedures for the cancelation of insurance policies, issued online, through its website. The procedures must ensure the confirmation and willingness of the customer to cancel the policy. In case of cancellation of the online insurance policy due to deficiency or ambiguousness in the systems, parts, components or programs of the website, the company must reimburse the customer for any damage incurred from the policy cancellation. In the case where the customer maliciously cancels the policy, the company must prove it and provide the customer in writing with the reasons for refusing to pay any future claims related to the cancelled policy.
41. The company must communicate with customers using at least two available communication means. Which include— but are not limited to—emails, recorded mail, text messages, phone, etc.
42. The company must, when sending a notice or advertisement to two or more customers via email or any other communication means, verify and ensure that the notice or advertisement does not contain any personal information related to the customer, and it must ensure that none of the recipients becomes aware of the identity of any other recipient.

43. Once the company issues an insurance policy through its website, it must provide a particular section for after-sale services on its website. This section must include but not limited to the following services:

    a Obtaining any additional type of services related to the policy in force.

    b Performing any endorsement on the policy such as additions, renewals, or cancelations.
     c Verifying the status of the policy (i.e., valid, expired, canceled).

    d Checking the date of inception and expiry of coverage.

    e Checking a schedule of the dates for premiums payments.

    f Checking paid premiums and the dates of payments and values.

44. The company must notify the customer in advance of the upcoming expiry of the insurance policy. The notification should be done within a timespan sufficient to allow the customer to renew the policy or obtain an insurance cover from another insurance company. In addition, the notification should be done through all communication means stated in Article (41) of this regulation.
45. The company must put in place necessary procedures to ensure the compliance of the cancelation process of compulsory insurance policies, through the website, with the provisions and instructions regulating the process of cancelation for this type of policies.
46. The company must notify the customer through email upon expiry of the cover of an insurance policy issued online. In addition, the company must notify the customer through email of the cancelation of an insurance policy issued online, and the company must include in the notification the date and reason of cancelation.

Dealing with Claims
 

47. The company must provide on its website to the customers or third party (harmed) electronic forms to report claims and upload copies of the claims' documents. After accepting the electronic claims form, the company must provide the applicant a reference number, and before paying the amount due through its website the company may receive original copies of the claim documentation to confirm and validate it.

Complaints

48. The company must, without prejudice to Articles (55) and (56) of the Insurance Market Code of conduct Regulations, provide on its website, all the information necessary for the customer or third party (harmed) to file a complaint and follow up on its status. The information must include as a minimum:

    a The complaint forms.

    b Contact information of the complaint handling department.

    c Appropriate contacts to inquire about complaints, (e.g., emails, fax, mailing address).

    d An overall description of the complaint handling procedures including estimated time to process complaints.

    e The contact details of the General Secretariat of the Committee for the Resolution of Insurance Disputes and Violations.

125. The Appointed Actuary shall discharge his or her responsibilities as stipulated in Article (20) of the Implementing Regulations of the Law on Supervision of Cooperative Insurance Companies and in accordance with the requirements of the Actuarial Work Regulation for Insurance and Reinsurance Companies issued by Saudi Central Bank.
126. The code of corporate governance of the Company shall define the roles and responsibilities of the Appointed Actuary and the manner in which he or she discharges his or her responsibilities in accordance with the requirements of the Actuarial Work Regulation for Insurance and Reinsurance Companies issued by Saudi Central Bank and other applicable laws, regulations, and rules.

127. The Senior Management are responsible for supervising the day-to-day activities of the Company.

128. The code of corporate governance of the Company shall define the roles and responsibilities, structure, and reporting lines of the Senior Management members.

     In addition to any other regulatory or supervisory requirements, the duties of the Senior Management shall include but not be limited to the following:

     a) Implementing the strategic plans of the Company

     b) Managing the day-to-day activities

     c) Setting procedures for identifying, measuring, mitigating and monitoring risks

     d) Setting policies, procedures, and controls to ensure the adequacy and effectiveness of the internal control system

     e) Record keeping and audit trails

     f) Acting on the Board's instructions and reporting to the Board

     g) Ensuring that regulatory and supervisory requirements are met to the highest extent possible

129. Each Senior Management position shall have a documented and detailed job description specifying its roles and responsibilities, specifications or qualifications, reporting lines, key role interactions, authority, and authority limits.
130. Members of the Senior Management must possess the skills, knowledge, and experience needed for effective and prudent management of the Company. Proof of the qualifications of senior managers shall be provided to Saudi Central Bank upon request.
131. Senior Management shall provide the Board with a comprehensive overview of its performance in every board meeting at least.
132. Priority shall be given to Saudis for senior management positions. Before appointing non-Saudis in senior positions, the Company shall prove the lack of available qualified Saudi personnel for the required position, in accordance with the Saudi Central Bank's Requirements for Appointments to Senior Positions in Financial Institutions, issued in July 2013.

28. All policies that are identified as ineligible according to the Articles mentioned in Surplus Eligibility Section should be excluded from the policyholders' surplus distribution. The total gross earned premiums of all eligible policies after excluding the Inwards reinsurance premium will be the base on which the policyholders’ surplus (“Surplus Amount”) will be distributed.

    The share of surplus for each eligible policy shall be based on the ’contribution’ of such eligible policies. The Contribution from an eligible policy shall be calculated as:

    (Gross Earned Premium less Gross Incurred Claim)

29. Then, the share of the eligible individual policy in the surplus amount will be calculated by multiplying Contribution per Eligible Policy multiplied by Total Share Surplus and divided by Total Contribution from all Eligible Policies.
30. Where a client holds a number of participating policies, a statement should be prepared for his total entitlement, summarizing the entitlement from individual policies held by that Client.